U.S. Department of Agriculture Food and Nutrition Service Administrative Review Branch FINAL AGENCY DECISION

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1 U.S. Department of Agriculture Food and Nutrition Service Administrative Review Branch 51 Express, Appellant, v. Case Number: C Retailer Operations Division, Respondent. 1 FINAL AGENCY DECISION It is the decision of the U.S. Department of Agriculture (USDA), Food and Nutrition Service (FNS), that there is sufficient evidence to support a finding that the initial decision by the Retailer Operations Division (Retailer Operations) to deny the application of 51 Express (Appellant) to participate in the Supplemental Nutrition Assistance Program (SNAP) was properly imposed. ISSUE The issue accepted for review is whether Retailer Operations took appropriate action, consistent with 7 CFR 278.1(b)(1), in its administration of the SNAP when it denied the application of Appellant to participate in the SNAP as an authorized retailer. CASE CHRONOLOGY FNS received a SNAP application from Appellant on February 9, FNS-contracted staff conducted an onsite store visit on February 13, Based on that visit, Retailer Operations determined that Appellant did not offer for sale a variety of foods in sufficient quantities on a continuous basis because it carried too few items in the dairy staple food category. By letter dated February 27, 2017, Retailer Operations requested the owner provide invoices/receipts dated prior to the store visit as proof of items in the dairy staple food category. The record shows this letter was delivered to Appellant on March 2, The record shows Appellant did not reply to this letter. By letter dated March 17, 2017, Retailer Operations informed the owner that the application of Appellant to participate as a SNAP authorized retailer was denied. Appellant did not meet the eligibility requirements as set forth in Section 278.1(b)(1) of the SNAP regulations. Retailer Operations determined that Appellant did not meet Criterion A. Retailer Operations also determined that the firm failed to meet Criterion B because its staple food sales comprise 50

2 percent or less of the total annual gross retail sales of the firm. This was based on the application information and the store visit report. Appellant was informed that in accordance with Section 278.1(k)(2) of the SNAP regulations a new application for the firm to participate in the SNAP could not be submitted for a period of six months from the date of the denial. The owner requested administrative review of the denial determination by an undated letter postmarked March 25, The appeal was granted by letter dated March 31, STANDARD OF REVIEW In an appeal of an adverse action, the Appellant bears the burden of proving by a preponderance of the evidence that the administrative action should be reversed. That means the Appellant has the burden of providing relevant evidence which a reasonable mind, considering the record as a whole, would accept as sufficient to support a conclusion that the argument asserted is more likely to be true than not true. CONTROLLING LAW AND REGULATIONS 7 USC 2023 and its implementing regulations at 7 CFR provide that A food retailer or wholesale food concern aggrieved by administrative action under 278.1, or may file a written request for review of the administrative action with FNS. The controlling statute in this matter is contained in the Food and Nutrition Act of 2008, as amended, 7 USC 2018 and 278 of Title 7 of the Code of Federal Regulations (CFR). Section 278.1(b)(1) establishes the authority upon which the application of any firm to participate in the SNAP may be denied if it fails to meet established eligibility requirements. 7 CFR states that Retail Food Store means: An establishment that sells food for home preparation and consumption normally displayed in a public area, and either offers for sale, on a continuous basis, a variety of foods in sufficient quantities in each of the four categories of staple foods including perishable foods in at least two such categories (Criterion A) or has more than 50 percent of its total gross retail sales in staple foods (Criterion B) Entities that have more than 50 percent of their total gross sales in hot and/or cold prepared, ready-to-eat foods that are intended for immediate consumption, and require no additional preparation, are not eligible for SNAP participation as retail food stores The regulations at 7 CFR define a staple food, in relevant part, as Food items intended for home preparation and consumption in each of the following staple food categories: Accessory food items including, but not limited to, coffee, tea, cocoa, carbonated and uncarbonated drinks, candy, condiments, and spices shall not be considered staple foods for the purpose of determining eligibility of any firm 7 CFR 278.1(b)(1)(i) imparts specific program requirements for retail food store participation, which reads, in part, An establishment shall effectuate the purposes of the program if it meets one of the following criteria: Offer for sale, on a continuous basis, a variety of qualifying foods in each of the four categories of staple foods including perishable foods in at 2

3 least two of the categories (Criterion A); or have more than 50 percent of the total gross retail sales of the establishment in staple foods (Criterion B). 7 CFR 278.l (b)(1)(ii)(a) provides, in relevant part, that in order for a retail store to qualify for authorization under Criterion A, it must Offer for sale and normally display in a public area, qualifying food items on a continuous basis (emphasis added) evidenced by having, on any given day of operation, no fewer than three different varieties of food items in each of the four staple food categories. 7 CFR 278.l (b)(1)(ii)(c) clarifies variety of staple foods as meaning, in relevant part, different types of foods, such as apples, cabbage, tomatoes, and squash in the fruit or vegetable staple food category, or milk, cheese, butter and yogurt in the dairy category. Variety of foods is not to be interpreted as different brands, different nutrient values, different varieties of packaging, or different package sizes. Similar processed food items with varying ingredients such as, but not limited to, sausages, breakfast cereals, milk, sliced breads and cheeses, and similar unprocessed food items, such as, but not limited to, different varieties of apples, cabbage, tomatoes or squash, shall not each be considered as more than one staple food variety for the purpose of determining variety 7 CFR 278.l (b)(1)(iii) provides, in relevant part, that in order for a retail store to qualify for authorization under Criterion B, it must have more than 50 percent of total gross retail sales in staple food sales. Total gross retail sales must include all retail sales of a firm, including food and non-food merchandise, as well as services 7 CFR 278.1(k)(2) reads, in part, FNS shall deny the application of any firm if it determines that the firm has failed to meet the eligibility requirements for authorization under Criterion A or Criterion B, as specified in paragraph (b)(1)(i) of this section... for a minimum period of six months from the effective date of the denial. The contentions are: APPELLANT S CONTENTIONS The store has been shut down the past three years due to fire during previous ownership. We have spent a large part of capital putting up this store. We are in the process of adding inventory. Attached you will find invoices proving it. We have made sure that milk, cheese, butter, fruit, cereals, eggs are available. EBT acceptance will help the neighborhood and the business. The owner advanced vendor receipts dated: 1/16/17, 1/17/17, 1/18/17, 2/13/17, and 3/24/17. ANALYSIS AND FINDINGS It is important to clarify for the record that the purpose of this review is to validate or to invalidate the initial determination of Retailer Operations, and as such it is limited to 3

4 consideration of the relevant facts and circumstances at the time of the decision. The authorization of a store to participate in the SNAP must be in accord with the Act and the Regulations, as amended; those requirements of law cannot be waived. It is not within the scope of this review to consider actions the owner may take to qualify for participation in the SNAP subsequent to that decision, such as stocking on display in a public area, the variety of staples in each of the four staple food categories on a continuous basis. The denial action is reviewed based on the evidence in the record at the time of the denial. The record reflects that the owner submitted an application received February 9, 2017, to participate as a retailer in the SNAP. The owner estimated that staple foods accounted for 30% of the store s total gross retail sales. The accessory other food items showed an estimate of 30% of the firm s total gross retail sales, and 40% of total gross retail sales were stated as coming from nonfoods including: gasoline, tobacco, lottery, and alcohol. An onsite review of Appellant s food inventory was conducted by FNS-contracted staff. The resultant inventory revealed insufficient stock in the dairy staple food category, thus not meeting Criterion A per 7 CFR 278.l (b)(1)(ii)(a). Retailer Operations requested documentation of dairy invoices, but no reply was received from the owner. The SNAP regulations at Section 278.1(b)(1)(ii) are clear that under Criterion A, a firm shall offer for sale qualifying staple food items on a continuous basis, evidenced by having, on any given day of operation, no fewer than three different varieties of food items in each of the four staple food categories. On the date of the store visit, Appellant did not maintain sufficient variety of qualifying staple foods on a continuous basis to be eligible to accept SNAP benefits as required by the regulations cited. Upon request for evidence of stock to support his application from Retailer Operations, the owner did not respond. A review of the vendor receipts/invoices provided for review do not evidence a variety and stock of dairy staple foods to meet eligibility criteria. The Frito Lay, Sam s Club and Pepsi receipts show no dairy products. The Aldi receipt is dated after the store visit and is not timely to the determination. The 23 page Core Mark receipt had no diary highlighted and no dairy products were seen upon review of this listing. Thus, Appellant did not meet Criteria A for eligibility. Based on Appellant s application and the FNS contractor photographs, Retailer Operations further determined that Appellant was ineligible for authorization under Criterion B per 7 CFR 278.l (b)(1)(iii). Staple food sales could not reasonably comprise more than 50% of the store s total annual gross retail sales. Appellant s own application estimate stated that staple foods accounted for 30% of its total gross retail sales. Appellant is a gas station store and features an abundance of accessory foods and ineligible items. It must be impressed upon Appellant that SNAP authorization is an administratively granted privilege subject to the terms and conditions for participation detailed in the Act and the regulations. Appellant s contention that reportedly now stocking milk, cheese and butter, does not provide any valid basis for dismissing the denial action. SNAP authorization is dependent solely upon whether a firm meets the eligibility requirements for participation at the time of application, and subsequently abides by the statute and implementing regulations. 4

5 CONCLUSION After review of all the pertinent documentation in the record, and based on the discussion herein, the initial decision by Retailer Operations to deny the application of Appellant to participate in the SNAP for a period of six months from the effective date of denial is sustained. Per 7 CFR 278.1(k)(2), Appellant may not reapply for SNAP authorization as a retail food store for a minimum period of six months from the effective date of the denial. RIGHTS AND REMEDIES Your attention is called to Section 14 of the Food and Nutrition Act of 2008 (7 USC 2023) and to Section of the Regulations (7 CFR 279.7) with respect to applicable rights to a judicial review of this determination. Please note that if a judicial review is desired, the Complaint, naming the United States as the defendant, must be filed in the U.S. District Court for the district in which the Appellant s owner resides or is engaged in business, or in any court of record of the State having competent jurisdiction. If any Complaint is filed, it must be filed within thirty (30) days of receipt of this Decision. Under the Freedom of Information Act, we are releasing this information in a redacted format as appropriate. FNS will protect, to the extent provided by law, personal information that could constitute an unwarranted invasion of privacy. M. Viens April 28, 2017 ADMINISTRATIVE REVIEW OFFICER 5